IMF Downgrades Its Economic Growth Projections

Forex News

The International Monetary Fund (IMF) reduced global economic growth forecasts for 2018 and 2019 amid growing global trade tension and crisis on emerging markets. The downgrade reflects a confluence of factors, including the introduction of import tariffs between the United States and China, weaker performances by Eurozone countries, Britain and Japan, and rising interest rates that are pressuring some emerging markets with capital outflows, notably Argentina, Brazil, Turkey, South Africa, Indonesia and Mexico.

According to new forecasts, global growth is projected to be 3.7% in both 2018 and 2019, down from July forecast of 3.9 % growth for both years. The Eurozone's 2018 growth forecast was cut to 2.0% from 2.2% previously.

The IMF expects the US economy to continue growing this year at 2.9%, but sees that rate falling to 2.5% next year amid the country's escalating trade war with China. The IMF's outlook for the Chinese economy stayed at 6.6% this year, its forecast for next year of 6.2% represents the slowest growth rate the Asian country has seen since 1990.

The outlook for world trade overall was also cut. The fund expects global trade to grow 4.2% this year, down from 5.2% in 2017 and from the 4.8% it expected in July.